Today is August 7 2011. At this time, is it a buyers market or sellers? If it's a buyers market, approximately when do experts expect it to flip?

Asked by Giovanni, Falls Church, VA Sun Aug 7, 2011

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18
Colin Storm, Agent, Falls Church, VA
Sun Aug 7, 2011
BEST ANSWER
Giovanni,

The answers here pretty much tell the story. There is no clear sense at the moment of whether markets at large are buyer's or sellers markets, and there is certainly not any form of consensus from experts on when (or if) a clear turnaround will occur.

BUYERS OR SELLERS MARKET:
Even in Falls Church, which seems to be the location you are asking about more specifically (and is where I live) there is a wide range of market behaviors from neighborhood to neighborhood, and by product type. Throughout much of Falls Church well updated single family detached homes and townhomes that are priced appropriately are selling in just days. Sellers market right? Not necessarily. If those same homes come on the market and are priced even the slightest bit too high, buyers are not jumping on them. There are a number of buyers out there, and I would say most are looking for that move-in ready home, however, it is still a down real estate market with a lot of looming uncertainty, and a down economy that some are starting to say has not even truly come out of a recession just yet, never mind "double dip", so buyers like yourself are tending to be reticent to risk over-paying, and they are wise to hesitate.

From a negotiating perspective transactions for these updated single family homes in Falls Church are relatively balanced.

Now, if you are someone who is willing to put some work into a home, there are more negotiating opportunities from the buyer perspective, and less competition from fellow shoppers.

If you are talking condo's, you are probably looking at an almost pure buyer's market. We saw some improvement here in the spring, but at this point the condo market has gone quite cold - again. This actually complicates the single family market because many would be buyers of single family homes are "move-up" condo owners who need to sell, but can't.

WHEN WILL THE MARKET FLIP?
Again, experts do not agree on this, and the reality is, nobody knows. There are some experts that in the last couple weeks have begun to say we have been experiencing a government induced slowdown in the market drop, but that we are still in a bubble market that has some retraction left before things can turn. There are others that say we are bouncing along the bottom and beginning to see growth in some areas. The reality is, there are such a broad range of indicators, many of which change in condition from month to month, that it is going to continue to be impossible to predict, and a market turnaround will only be something we can identify after the fact.

WHAT WE DO KNOW:
We know rents are on the rise in our area and expected to continue agressively on that track, while prices (relative to recent history) and interest rates are low. If you are looking for your home to be a great short term investment via a profitable sale in the next few years, you may be disappointed. If you are looking at homeownership as a place to live that can give you payment and lifestyle stability for many years to come, then now will likely go down as the best time to buy in comparison to the decade to come. For the last 35 years Northern Virginia real estate has doubled in value every decade. Right now we are in a long standing lag, which has created an extended window of opportunity to get in before we move into the next growth cycle. On top of that, you can buy at interest rates that you will be able to brag about for decades.

>>>Quite verbose, but I hope that is all helpful
1 vote
John, , District of Columbia
Sun Aug 7, 2011
It will flip at exactly 8:45pm on September 23rd.
6 votes
Vicky Chrisn…, Agent, Purcellvile, VA
Sun Aug 7, 2011
I am surprised to see so many agents from areas far, far from NVa attempting to answer this question. Real estate is local... and hyper local. As some have said, it depends on which segment of the market you're looking in and how you define a buyers market. If you attempt to buy thinking its a buyers market and so you can pick up anything for cheap you are going to be sorely disappointed. If you attempt to sell and think you're going to get your magic 2005 price you are going to be sorely disappointed. So we look at stats. The National Association of REALTORS says a "balanced market" has 6 months of inventory... I just pulled up one zip in Falls Church.... June numbers show 58 active listings in that zip (22043), and 54 homes went under contract in June. That means we have approximately 1 months worth of inventory. That's a sellers market if you ask NAR., but the median price is within 1% of what it was last year. If you want to contact me with regard to the type of home you'd like to purchase I can give you far more insight as to what that submarket is doing, which could be dramatically different from the stats I am citing here. You can reach me at vchrisner@kw.com 703-669-3142
Web Reference:  http://www.VickyChrisner.com
3 votes
Ron Thomas, Agent, Fresno, CA
Sun Aug 7, 2011
BOTTOM OF THE MARKET
There has been a lot of speculation and negativity about when the BOTTOM will occur.
The BOTTOM will not be heralded by a Town Crier, walking around, shouting “The Bottom has been reached!”
The BOTTOM will not be accompanied by an article in the Wall Street Journal or New York Times, announcing “The Bottom happened yesterday at 4:30”
The BOTTOM will be completely different for you, than it will be for everyone else.
The reason for this is that you will not be buying the MARKET; you will be buying one house!
There is a fixation among some Buyers, that they be able to tell everyone that they got the absolute BEST price in the world! (I’m sure you know people like this.) This obsessiveness will surely not be rewarded, because there will always be someone who got a better deal.

There is a very old saying that; “To have a good sale, the Buyer had to have been willing to pay more, and the Seller had to have been willing to take less.”

The truth is, when you buy that house, any house, you are establishing the BOTTOM of the MARKET for THAT house. The clock starts on that investment. And considering that Real Estate is a long-term investment; if you can look back in five years and see that you made a good investment….

This whole controversy must take into consideration what you are buying:
If the object-of-your-affection is a Home for your family, then your priorities are skewed if you are obsessing on the Bottom-of-the-market: You are first, last and always buying a HOME for your family; complete with Security, a good neighborhood, good schools, 3 bedrooms, 1647 square feet, a wooded backyard, a 2 car garage, etc.
Sure you want to make a good buy, but that price should not be on the top of your list: Would you be happier in a crummy, crime-ridden neighborhood, with a house that is falling down, BUT, you made a great deal! Or, would your rather have the best house on the block, where you don’t have to lock your doors at night, and your schools are the best in the State, for a good price? You choose.

The last consideration is the dynamic nature of the Market: By holding out for the BOTTOM of the MARKET, you are betting that, not only do the prices continue to drop, but also that:
1.) Interest rates do not increase
2.) The house you want is still available
3.) Your financial position does not change for the worse.
Consider that if you are looking for a home at $400,000 with a loan at 5%, your monthly payments could be $2689.
If you waited for the house to go down $10,000, but the interest rate went up 1%, your monthly payment would INCREASE to $2876!
If you waited for the house to go down $20,000, but the interest rate went up another .5%, your monthly payment would now be $2935!
(these are ball-park figures; please talk to your Mortgage specialists.)
If you are determine to play the interest-rate-game; know that the current Interest Rates are the lowest that they have been since just after World War II! That’s 60 years!
But in the 80’s we had 12 and 13% home loans. (That would make that monthly payment $4,966!)
2 votes
Don Tepper, Agent, Burke, VA
Tue Aug 9, 2011
The other Northern Virginia agents have given you a pretty good evaluation of Falls Church. Just to add my 2 cents to the discussion (I own a rental property in 22046 and co-own another in 22043 . . . I live 12 miles from Falls Church, and lived there (just blocks outside the city limits) for several years): Generally, Falls Church is quite strong. That's especially true of a lot of areas inside the Beltway. But as was noted below, the properties still have to be properly priced.

As a buyer, you may find relatively little inventory especially if you narrow your parameters down (close to Metro, for instance, or in a lower price range perhaps). Vicky touched on that point.

As a result, a "flip" isn't really possible since it isn't strongly a buyer's (or seller's) market at the moment. My personal thoughts: If the housing market in general deteriorates further, Falls Church will be somewhat insulated due to the number of federal workers and other workers who indirectly benefit from the federal workforce. Falls Church is also just a good location--depending precisely where you are, it's close to the Beltway, close to 66, close to 50, close to Metro. It's not like some of the farther-out areas that can fall out of favor pretty quickly due to commuting hassles and other factors. And it's more affordable than Arlington. If/when the market recovers generally, I'd expect a stronger-than-average surge in the Falls Church area.

I'm certainly not a "rah-rah . . . Now is a great time to buy!" agent. But if you want to buy and are financially comfortable, it's probably a pretty good time, particularly in Falls Church. As some of the others advise, though, make the decision based on your own personal needs and wants, and not in an effort to time the market.

Hope that helps.
1 vote
Lauryn Eadie, Agent, Reston, VA
Sun Aug 7, 2011
Giovanni,

First of all, I would like to give a hats off to my colleage Ron Thomas who answered below for a very appropriate response, and one similar to what I would have answered.

Since I agree with Ron's answer, I will not re-state but piggy back on top of that.

It is hard to say because much of the news we listen to about Real Estate is National, and the Metropolitan area surrounding DC has been in its own little world since the beginning of 2010. We have seen DOM decrease substantially, we have seen Prices actually increase between 3-5% in some neighborhoods in the last 6 months. With the interest rate between 4.5 - 5 % for qualified buyers, and low down payments likely to change on Sept 30, many buyers have jumped in the market.

As of today there are only 3493 Active homes for sale in Fairfax County. Of those, ONLY 115 are Foreclosures (in the whole county!) and 315 are short sales. That means only 12% of the active market right now is distressed.
Compared to 2009, I would say we are in a much different position.

I think the numbers speak for themselves for now. We are expecting to seem some backlash in the Winter, early spring 2012 because of whole robo signing incident last fall, but you will likely see more backlash in areas like DC and Maryland. Virginia has a very tight and seplled out foreclosure process which will diminish the backlash that we see, as I am told from a Real Estate attorney I work with regularly.
1 vote
Phil Rotondo, Agent, Melbourne, FL
Sun Aug 7, 2011
The market flips because we don't know when.
No one of import came screaming that in Aug. 2005 (in FL) the market was going to flip.
Count on the same for the next flip..
Web Reference:  http://www.321property.com
1 vote
Leah Henders…, , Columbia, SC
Tue Aug 9, 2011
This is a great question, Giovanni. Generally my answer is that it depends on where you are in the country. Absorption rate is the marker for this dynamic. The absorption rate is the amount of time it takes for all the homes on the market are sold if another home didn't enter the market. A recent article I read stated that some mid-west states have an absorption rate of four. A strong seller's market. With four months inventory on the market all homes will sell in four months if another home didn't enter the market. Again, this means it would take four months before all homes were sold if another one didn't enter the market. I believe the threshold is 7 months where absorption rate switches from one market to the other. So in states with absorption rates are in the double digits the buyer's market is extremely strong and it will take a bit of time before things re-calibrate.

Thanks for posing your question to us here on Trulia.

Here is some additional information on the topic:

http://realestate.about.com/od/knowthemath/a/absorption_rate.htm
0 votes
Annette Law…, Agent, Palm Harbor, FL
Mon Aug 8, 2011
Although Ron is not a Falls Church native, the advise provided can be universally applied. Sure, we all know FALLS CHURCH and all similar cities exist on a false economy based on the size of government increasing...FOREVER. As others have suggested, real estate is a very local issue when determining the trend of prices and values.

When it comes to the purchase of a home, most certainly other factors are involved of most significant would be your purpose for buying a place you will call home.

Predicting the date of the flip requires knowledge of many things including how the Eurozone will influence USA exports and jobs. What happens when China's housing crisis results in a few street riots and they decide to invest locally. Who is in line to loan the US money for those entitlements we can't afford. And let's not overlook the taunting in DC and the sandbox fight with S&P. All of these can extend the flip date or should these complication blow away and next fall our leaders actually demonstrate an understanding of fiscal responsibility, we could see the arrows pointing up in prices and value in all areas, not just those supported by taxpayers.

Unfortunately, in forums such as this, you will find commentors who have no knowledge of real estate, have not acquired real estate in the past five years nor have they liquidated real estate assets recently. They call themselves experts also.

The best guidance is to follow Ron's reminder, you are buying a HOME for reasons you have determined and at the time of your choosing. You will only know the date of the flip when it appears in your rear view mirror.
0 votes
Robert Schult, Agent, Sarasota, FL
Sun Aug 7, 2011
I agree withy my fellow Realtors that have said real estate is local. Your market may be and probably is entirely different then the market I represent and other markets through out the country. There are some areas of the country that are doing well because of local factors, primarily jobs and others that have a long way to go due to short sales and foreclosures. Talk to real estate pros in your community to get an idea of the health of your local market. Though things can change, you are at least getting the best insight into your current market.
0 votes
James Downing, Agent, Dunedin, FL
Sun Aug 7, 2011
I'm with Vicky. Just as I don't discuss market conditions in other states (because I know nothing about them); others who are not here should not comment on our market.

The inventory is low right now. While I am sure many owners would LOVE to sell; they are not. They bought high in 2003-2005? and they are not willing to take a loss. Unlike other parts of the country; they still have jobs and are staying put; so we are not seeing the foreclosure and short sale market that I hear about in other parts of the country.

Is it a buyers market? Only in a few areas. A sellers market? In some areas yes. Will it flip? sure. When? No one knows.
Web Reference:  http://www.metrodchouses.com
0 votes
Agnes Tabor, Agent, Naples, FL
Sun Aug 7, 2011
Good question , buyers market, but one that really does not have an answer for when it will flip back. We as real estate professionals must use what ever comps are at hand, speculation does not come into play. We are researchers and negotiators we must not speculate at our clients expense.
0 votes
John Fitzger…, , Fairfax County, VA
Sun Aug 7, 2011
"Falls Church", as an address, covers both Falls Church City and a large area of Fairfax County from Annandale to McLean. All residential real estate is as local a market as it is possible to be. No one can really answer your question for that reason alone ( you're not being specific enough).

Additionally, real estate market conditions are, to a large extent, beyond our control. What will happen to interest rates and local employment ( now, declining in Northern Virginia, but for how long is anyone's guess) is totally beyond both our control and our predictive abilities.

I think that if you are comfortable enough about your own financial position to be OK with buying, engaging a local agent with knowledge to find a good deal on a home you like well enough to live in for the next 20 years is a good idea.

That being said, there are serious potential negatives about Falls Church City that you should know about. Bad decisions made two generations ago by the then residents and political leaders of Falls Church City are starting to have consequences that could overcome its highly sought after living conditions and schools, and even, potentially, affect funding for same. You may E-mail me at johnfitzgerald01@yahoo.com for details.
0 votes
Jameele McDa…, , Shelby Township, MI
Sun Aug 7, 2011
It is estimated that the market should start to flip around 2015.
0 votes
Sally Grenier, Agent, Boulder, CO
Sun Aug 7, 2011
As you can see by the variety of answers, nobody can say exactly when the market will flip. And...nobody can say one way or another if we are in a buyer's market or a sellers market right this second....because REAL ESTATE IS LOCAL! One neighborhood could be experiencing a recovery and could be a seller's market, while a few miles away in another neighborhood it could still be declining and considered a buyer's market.

This is why you need to work with a REALTOR who can work with you as a buyer's agent. He/she will help you decide which area, which price range, etc. is the BEST buy for you right now. Don't base your decision to buy on what the market is or isn't doing. You should base it on what's best for you and your family right now. I hear of so many people "on the fence" waiting for the market to bottom out. But guess what? You don't know it has bottomed out, until several months after the fact, when all of the sales stats are in. By then, you missed the boat. If you want to buy now, then buy! Prices are still low, interest rates are low, and there's good inventory to choose from.
Web Reference:  http://www.sallygrenier.com
0 votes
allan erps,A…, Agent, Pearl River, NY
Sun Aug 7, 2011
The crystal ball is still on order! One thing I can say in general is not anythime soon! Not trying to be negative at all but indicators, future foreclosures, economy, joblessness are enough for me to think that the overinflated market prices of 2003-2005 will take a cycle of about 12 years to even out. My crystal ball says another 5 years to go......... Believe me I hope I am WRONG!
0 votes
David Burnham, , Washington, DC
Sun Aug 7, 2011
Depends on how you think about it. Based on average days on the market, it is still a seller's market and I don't expect that to change in this area anytime soon. The Federal government is a very steady force in the local economy, especially in close in areas such as Falls Church, and without a large meltdown, you will still see houses moving relatively quickly compared to other parts of the country.

That said, some people might say it is a buyer's market because sellers don't have a lot of pricing power right now. If a seller does not price their home correctly, it will not sell until the price comes down. When good homes are priced correctly, they often go under contract in a matter of days, making it hard for some buyers.

As the saying goes, real estate is local, and in the DC area some communities and some types of homes are very hot and moving quickly. Others are much cooler.
0 votes
Christine Mo…, Agent, Wilbraham, MA
Sun Aug 7, 2011
Accroding to the forclosure market they are saying 2016. If all of the forclosures stopped there are still enough already on the market to last a few years. A new wave is coming and so that is where they get the number.
people will disagree or dispute but it is all just guessing at this point.
0 votes
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